A House of Lords select committee has said the government should consider further tax incentives to promote biofuels use.
It suggests that, if biofuel use in road transport is to expand and make a contribution to the reduction of greenhouse gases, government intervention will be necessary in at least the short term in order to provide assurance to investors that production will continue to be financially viable.
The report points out that countries that are leaders in promoting the use of biofuels use significant tax concessions to achieve this.
Chairman of the Committee, Lord Renton of Mount Harry, said: “Within the last few weeks we have seen Sir Nicholas Stern’s warnings about the environmental consequences of carbon emissions. Increasing Europe’s use of biofuels has a significant role to play in dealing with this problem.
“Britain is however falling short of its targets on the use of biofuels. We welcome the government’s decision to introduce a Renewable Transport Fuels Obligation – and, indeed, we would urge the European Commission to require all Member States to introduce similar measures.
“But some of our European partners offer significant tax concessions to stimulate investment in biofuels. We ask the government to consider whether more should be done in this area here.”